Model Inventory

Definition

A Model Inventory in the context of Risk Management is a database/MIS developed for the purpose of aggregating quantitative model related information that is in use by a firm or organization. Sometimes also called a Model Map.

Usage

An inventory of models is a tool supporting overall Model Governance, with a key objective identifying and managing Model Risk.

Issues and Challenges

• Establishing a comprehensive model inventory requires a sharp definition of what constitutes a model and this may be a non-trivial undertaking in organizations with large quantitative operations
• While the accumulation of a large set of models may create a sense that principles from Portfolio Management may be applicable (for example Risk Diversification, the very abstract and intricate nature of model risk requires caution.

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